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The Finance Ministry has closed its October sukuk issuance, raising SAR 7.8 bn from fixed-income investors, up from SAR 2.6 bn last month, according to a National Debt Management Center (NDMC) statement (pdf). This is part of the government’s SAR-denominated sukuk program.
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The month saw yields on shorter tranches increase on a monthly basis, while yields for longer tranches declined. The issuance was structured in five tranches:
- A 5-year tranche valued at SAR 823.2 mn with a 4.7% yield;
- A 7-year tranche valued at SAR 319.5 mn with a 4.8% yield;
- A 10-year tranche valued at SAR 2.2 bn with a 5.0% yield;
- A 12-year tranche valued at SAR 1.4 bn with a 5.1% yield;
- A 15-year tranche valued at SAR 3.1 bn with a 5.2% yield.
A snapshot of gov’t debt obligations in 2024: Debt maturities in 2024 stand at c. SAR 21 bn, down from SAR 40 bn on the back of NDMC’s “successful execution of liability management transaction in 2023,” according to the center’s annual borrowing plan report for 2024 (pdf). The government’s total debt portfolio is expected to reach SAR 1.1 tn by year-end, placing the debt-to-GDP ratio at 26.2%.
The macro picture: The budget’s deficit for this year is projected to reach SAR 79 bn, putting our financing needs at around SAR 86 bn. Up to 35% of those needs will be financed through domestic SAR-denominated instruments, while up to 40% is expected to be raised in international markets, and up to 50% through the government alternative funding channel, which aims at financing the government’s capex and infrastructure projects.
By the numbers: Trading volumes in Tadawul’s sukuk/bond market logged SAR 16 bn across 119 negotiated trades in 9M 2024, an Argaam survey reported earlier this month. July emerged as the top-performing month, with transactions worth SAR 8.5 bn.
Aramco + the private sector have been loving sukuks: State owned oil giant Aramco raised USD 3 bn from a USD-denominated sukuk issuance in late August and Al Rajhi Bank secured a USD 1.92 bn Shariah-compliant sustainability-linked syndicated loan early this month. Meanwhile, the previous two weeks saw Riyad Bank close a USD 750 mn additional tier 1 (AT1) sustainable sukuk issuance and Tamweel Aloula close an undisclosed sukuk issuance as part of SAR SAR 500 mn AT1 sukuk issuance program.
